"Physical Spin-off Listing Korea Discount"... FSC Halts Physical Spin-off Listings with Inadequate Shareholder Protection

Kim So-young, Vice Chairman of the Financial Services Commission, is speaking at the 1st Real Estate Related Ministers' Meeting held at the Government Seoul Office in Jongno-gu, Seoul on the 21st. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Ji Yeon-jin] Going forward, if a subsidiary created through a physical division by a listed company plans to go public, the listing will be prohibited if the parent company's shareholder protection measures are insufficient. Additionally, shareholders of the parent company who opposed the physical division will be granted the right to request a stock purchase.

On the 14th, Kim So-young, Vice Chairman of the Financial Services Commission, announced these measures at the "Policy Seminar on Shareholder Protection Measures during the Listing of Physically Divided Subsidiaries" held at the Bulls Hall on the 3rd floor of the Korea Financial Investment Association in Yeouido, Seoul.

Vice Chairman Kim stated, "The new government will swiftly advance national tasks to restore fairness and trust in the capital market, doing its utmost so that our economy and companies receive fair evaluations in the market. When conducting a physical division, companies will be required to disclose their restructuring plans, including subsidiary listing plans and shareholder protection measures, so that ordinary shareholders can participate in corporate decision-making with more comprehensive information."

He continued, "When a physically divided subsidiary is listed overlapping with the parent company, we will review how diligently the parent company has made efforts to protect shareholders, and if found insufficient, listing will be restricted. We will also guarantee the right to exit through the stock purchase request right to shareholders who opposed the physical division but were marginalized during the decision-making process."

Regarding the issue raised by some parties about preferential allocation of new shares to parent company shareholders during the listing of physically divided subsidiaries, the seminar today will carefully examine the pros and cons and practical limitations before deciding on its introduction.

Commissioner Kim explained, "The so-called Korea discount problem, where our economy and companies do not receive fair evaluations in the capital market, is such an old issue that the term itself feels outdated. The value of shares as equity rights largely consists of the right to participate in decision-making and the claim to current and future profits, and capital markets that do not adequately guarantee these two values are not highly valued by investors."

He emphasized, "We must seriously accept the fact that indicators like PER and PBR of our stock market have consistently been lower than those of advanced and emerging countries. If we do not improve now, the Korea discount will remain a term passed down to future generations."

This content was produced with the assistance of AI translation services.